Question
The concept of 'Better, Simpler Strategy' has significantly influenced corporate strategies and business models by emphasizing the importance of creating value for customers and reducing costs. Companies like Apple and Amazon have been successful because they focus on increasing the willingness to pay (WTP) of their customers by offering high-quality, innovative products and services. At the same time, they strive to decrease their cost of doing business through efficient operations and economies of scale. This dual focus allows them to capture a larger portion of the value they create, leading to higher profitability and competitive advantage.
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As companies increase production volumes, costs decline because employees gain familiarity with products and processes and find new ways to improve productivity. By 1926, the cost of manufacturing a Ford Model T had dropped to $840 — from $1300 in 1909. This price drop was despite a threefold rise in wages for workers. Learning alone had dropped costs by nearly one-third. Learning not only improves productivity but can also improve WTP in some contexts.
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